The long-term goal of these studies is to understand cellular and molecular mechanisms that control bone development and homeostasis. Previous accomplishments range from identification of extracellular matrix molecules, transcription factors and receptors/signaling molecules with critical functions in skeletal tissues to discovery of diseases caused by mutations in their genes. During the past funding period, mice with reduced expression of vascular endothelial growth factor (VEGF) in osteoblast precursor cells were found to have osteoporosis-like skeletons with reduced bone mass and increased bone marrow fat. To characterize the mechanisms by which VEGF regulates osteoblast and adipocyte fates in mesenchymal stem cells during bone homeostasis, extensive analyses of VEGF-dependent processes in vivo and in cultures of mesenchymal stem cells are now proposed. The experiments, based on data suggesting that VEGF controls osteoblast and adipocyte formation via unconventional, intracrine, mechanisms, address innovative hypotheses concerning the role of VEGF in mesenchymal stem cell differentiation to osteoblasts and adipocytes. Finally, based on the discovery that vascular endothelial cells can be converted to multipotent mesenchymal stem-like cells (EndMT), by mechanisms that are inhibited by VEGF, experiments are designed to explore the possibility of inducing EndMT as a way of promoting bone formation during surgical bone repair and to understand the roles of VEGF in this process.